Shenhua Group mulls large-scale regrouping to enhance efficiency

Shenhua Group, China's largest coal producer, which has launched a series of acquisitions, is mulling larger-scale regroupings to enhance efficiency and competitiveness, according to one insider of the group.

The move was in line with efforts of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), which ordered central government owned enterprises to quicken regrouping steps this year, in order to accelerate consolidation of coal, steel and power businesses, said a source on February 9.

"The number of central government-owned companies will reduce to 100 or less in 2017," officials with the SASAC said earlier this year.

"The acquisition and regrouping are aimed at strengthening competitiveness, downsizing the floated enterprises and improving management structure," said Li Shuguang, an expert of China University of Political Science and Law.

Last year, ten central government-owned firms regrouped into five, while this year we will focus on deep regrouping and core businesses, according to Li Jin, chief researcher of China Enterprises Institute.

China Baowu Steel Group, restructured from Wuhan Iron & Steel Group (WISCO) and Baoshan Iron & Steel Group (Baosteel), managed to reduce investment by some 40 billion yuan and new steelmaking capacity by 10 million tonnes per annum.